Iron ore futures in China edged higher in early trade on Monday, underpinned by data showing a drop in stocks of the steelmaking raw material at the country’s ports, and after the central bank cut the interest rate on its medium-term lending. China’s port inventory of imported iron ore dipped to 130.65 million tonnes, as of last Friday, from 131.1 million tonnes a week earlier, SteelHome consultancy data showed. That was 9% down from 143.60 million tonnes a year ago. SH-TOT-IRONINV The Dalian Commodity Exchange’s most-traded iron ore contract, which expires in May, was up 0.7% at 627.50 yuan ($89.97) a tonne by 0311 GMT. Supply concerns have also lifted spot prices of China-bound iron ore, with the benchmark 62% grade settling at a three-week-high $88.50 a tonne on Friday, SteelHome data showed. SH-CCN-IRNOR62 “Iron ore prices, both futures and spot prices, are supported by a decrease in iron ore inventory, signs of supply tightness and the positive outlook,” said Helen Lau, metals and mining analyst at Argonaut Securities in Hong Kong. Recent bad weather had caused delays in iron ore shipments from Australia and Brazil, while cargo unloading has also been hampered by quarantine requirements at ports, she added. Lau also saw further support to iron ore prices from expectations of additional stimulus measures from Beijing to prop up the slowing Chinese economy. On Monday, China’s central bank cut the interest rate on its medium-term lending as policymakers sought to ease the drag to the businesses from a coronavirus outbreak that has severely disrupted activity. Keeping iron ore’s gains in check, however, China’s downstream steel demand is widely expected to remain weak for some time as the coronavirus epidemic, which has now killed more than 1,700 people, shows no sign of easing. A survey by Chinese steel industry data provider Mysteel showed that among 87 steelmakers that operate electric arc furnaces (EAF) in the country, only 18 mills and one independent EAF producer had resumed operations as of last Wednesday.
Source : https://af.reuters.com/article/commoditiesNews/